FOLLOW US

The cryptocurrencies bear market could last longer as bitcoin confirms its recent breakdown below $20,000, according to a note from Fairlead Strategies.

The technical analysis-focused research firm highlighted that bitcoin is currently testing a support range of between $18,300 and $19,500 following last week's CPI-induced sell-off. Bitcoin was down about 0.5% at $18,950 after the Fed announced another 75-basis-point rate hike Wednesday afternoon.

"Negative long-term momentum is growing per the monthly MACD histogram, allowing long-term oversold conditions to be absorbed. As it stands, it could take months for a meaningful shift," Stockton said, referring to the Moving Average Convergence-Divergence indicator. "Short-term momentum has shifted negative per a new daily MACD 'sell' signal, increasing risk as long-term support is tested."

Bitcoin's short, intermediate, and long-term momentum signals have become bearish amid the ongoing decline. The rollover of its 50-day moving average suggests momentum could continue to the downside, according to Stockton.

Another bad omen for the broader crypto market is that bitcoin has been once again outperforming ether on a relative basis since early September.

Ether has been in sell-off mode following its successful merge, which shifted the Ethereum blockchain to a proof-of-stake system from proof-of-work. The decline in ether has led Stockton to believe there is an increased likelihood that the cryptocurrency can test $1,000 as support, r

epresenting potential downside of 27% from current levels.

"The shift favoring bitcoin is a bearish indication for the cryptocurrency markets broadly, reflecting defensive rotation as bitcoin and other altcoins get into support 'retest' mode," Stockton said. 

But bitcoin can alter its bearish trajectory if it successfully avoids a confirmed breakdown below support and reclaims resistance at $22,000, she said. Until then, expect the crypto bear market to continue.